Vietnam’s Monthly Economic Overview (August 2024)

1. Industrial Production

Vietnam’s industrial production has continued its positive trajectory into August 2024. The Industrial Production Index (IIP) for the month is estimated to increase by 2.0% compared to July and by 9.5% year-on-year. Cumulatively, the IIP for the first eight months of 2024 is projected to rise by 8.6% compared to the same period in 2023, marking a significant rebound from the 0.2% decline experienced last year.

The manufacturing and processing sector led the charge, expanding by 9.7% and contributing 8.4 percentage points to overall growth. The electricity production and distribution sector followed with an 11.6% increase, adding 1 percentage point. Meanwhile, the water supply and waste management sector grew by 7.8%, contributing 0.1 percentage points. However, the mining sector remained a drag on the overall index, shrinking by 6.0% and subtracting 0.9 percentage points from the total.

On a regional basis, 61 provinces recorded growth in IIP over the first eight months, with only two provinces experiencing a decline. The labor force in industrial enterprises, as of August 1, 2024, rose by 0.9% compared to the previous month and by 4.5% year-on-year.

2. Business Registration

Vietnam's business registration activity showed mixed results in August. A total of 13,400 new enterprises were established, a decrease of 15.2% compared to July and 12.8% year-on-year. Meanwhile, nearly 8,500 enterprises resumed operations.

On the flip side, 5,334 businesses registered for temporary suspension of operations, while 5,160 businesses halted operations, awaiting dissolution. Additionally, 1,927 enterprises completed dissolution procedures, marking an 11.4% increase compared to the previous month and a significant 26.0% increase year-on-year.

For the first eight months of 2024, the country recorded 168,100 newly established and reactivated businesses, averaging over 21,000 per month. However, the market also saw the exit of 135,300 businesses, averaging 16,900 business closures per month.

3. Investment

Investment capital sourced from the state budget has been actively disbursed, reflecting a focus by the Government, the Prime Minister, and various ministries on pushing forward economic recovery efforts. In August 2024, total state budget investment is estimated at VND 62.1 trillion, up 1.3% year-on-year. For the first eight months, state budget investment is estimated at VND 363.1 trillion, reaching 47.8% of the annual plan and posting a 2.0% increase compared to the same period in 2023.

Foreign investment remained a critical pillar of economic growth. As of August 31, 2024, total registered foreign direct investment (FDI), including new capital registrations, adjustments, and capital contributions, amounted to USD 20.52 billion, marking a 7% increase year-on-year. Realized FDI for the same period reached USD 14.15 billion, reflecting an 8.0% increase year-on-year.

Vietnamese outbound investment saw a dip, with 75 newly certified projects totaling USD 148 million, a decrease of 39.4% compared to the same period in 2023. Additionally, 17 projects adjusted their investment, decreasing by a significant USD 736.7 million.

4. Trade

a) Retail Sales of Consumer Goods and Services:

Retail sales of consumer goods and services in August 2024 are estimated to reach VND 526.6 trillion, representing a 7.9% year-on-year increase. Over the first eight months of 2024, retail sales at current prices are projected to total VND 4,148.4 trillion, an 8.5% year-on-year increase (compared to 10.3% in the same period of 2023). When adjusted for inflation, the increase is 5.3% (compared to 8.0% last year).

b) Exports and Imports of Goods:

In August, preliminary figures place Vietnam’s total import-export turnover at USD 70.65 billion, a modest 0.8% month-on-month increase and a 13.5% increase year-on-year.

Exports:

Export turnover in August 2024 is estimated at USD 37.59 billion, a 3.7% increase month-on-month and a 14.5% increase year-on-year. Cumulatively, export turnover for the first eight months is projected at USD 265.09 billion, a robust 15.8% increase over the same period in 2023. The domestic sector accounted for USD 73.88 billion, a 21% increase, representing 27.9% of total export turnover. The foreign-invested sector (including crude oil) accounted for USD 191.21 billion, up 13.9%, making up 72.1% of the total.

The industrial processing sector continues to dominate, with exports totaling USD 233.33 billion, constituting 88% of total exports for the first eight months.

Imports:

Imports in August 2024 are estimated at USD 33.06 billion, a 2.4% decrease month-on-month, but a 12.4% increase year-on-year. For the first eight months, imports are expected to total USD 246.02 billion, a 17.7% year-on-year increase. The domestic sector recorded USD 89.58 billion in imports, a 19.7% increase, while the foreign-invested sector reached USD 156.44 billion, up 16.5%.

Materials for production accounted for 93.9% of total imports, amounting to USD 230.95 billion.

Trade Balance:

Vietnam's trade surplus in August is preliminarily estimated at USD 4.53 billion. Cumulatively, the trade balance for the first eight months of 2024 shows a surplus of USD 19.07 billion (compared to a USD 19.9 billion surplus in the same period last year). While the domestic sector recorded a trade deficit of USD 15.7 billion, the foreign-invested sector (including crude oil) enjoyed a surplus of USD 34.77 billion.

5. Consumer Price Index (CPI), Gold Price Index, and US Dollar

Vietnam’s Consumer Price Index (CPI) remained stable in August 2024, unchanged from the previous month. Compared to December 2023, the CPI has risen by 1.89%, and it is up 3.45% year-on-year. On average, CPI in the first eight months of 2024 increased by 4.04% compared to the same period in 2023, with core inflation rising by 2.71%.

The Gold Price Index rose by 1.93% in August, a staggering 31.05% increase year-on-year. On average, the gold price index for the first eight months of 2024 surged by 25.54%.

In contrast, the US Dollar Index decreased by 0.64% in August compared to the previous month, but it has grown by 3.55% since December 2023 and by 5.86% year-on-year. For the first eight months of 2024, the average increase of the US Dollar Index stood at 5.85%.

Source: GSO

Compiled by Vietnam Business Information